Currently working in San Francisco, I cover business and technology in China, with special emphasis on billionaires and entrepreneurship . A recent graduate from Stanford University's journalism program, I worked in Hong Kong as an anchor and on-camera reporter and traveled throughout China and Asia-Pacific. Prior to that, I was chief business correspondent for China's largest news agency, covering economies, companies, markets and governments. Meanwhile, I wrote columns for China's leading newspapers, such as International Herald Leader, Shanghai Securities Journal, Reference News, etc. While at Stanford University, I covered tech companies and entrepreneurship in Silicon Valley for Peninsula Press, an independent news site powered by Stanford's Graduate Program in Journalism.
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Shi Zhengrong, founder of Suntech Power and a former Forbes billionaire. (image credit: news.xinhua.com)

Shi Zhengrong, founder of solar giant Suntech Power and once one of China‘s richest men, saw a significant part of his empire collapse into bankruptcy on Thursday amid financial pressures and internal conflicts, despite a huge Chinese government effort to bail out an ailing industry beset by plunging solar panel prices and steep Western tariffs on Chinese solar products.

As the shares continued to dive on the New York Stock Exchange, Wuxi-based Suntech Power Holdings announced Thursday that a local intermediate court in Jiangsu Province formally accepted the petition for insolvency and restructuring of Wuxi Suntech Power, the company’s largest subsidiary. The petition was filed by a group of eight Chinese banks, which are owed as much as $1.14 billion (7.1 billion yuan) and include Industrial & Commercial Bank of China, Agricultural Bank of China and Bank of China, according to Wuxi Municipal Intermediate People’s Court quoted by China’s state Xinhua News Agency.

Shi Zhengrong, who listed shares of Suntech Power in New York in 2005, had a peak net worth of $2.9 billion in 2008 and ranked No. 396 on Forbes’ World’s Billionaires List. His fortune had dropped to less than $250 million before the court’s approval of petition. Share price of Suntech plunged 25% to 44 cents Thursday.

Suntech Power, a solar panel maker founded in 2001, had grown into a flagship for China’s renewable energy industry by 2011 with a 10,000 workforce in Wuxi, due to the central government’s preferential policies toward the renewable energy industry and lending support from local banks. But rapid expansion of China’s solar panel industry over the past decade has resulted in a capacity glut and has sent panel prices plummeting about 75%. While solar companies are struggling with financial pressures, numerous complaints from the U.S. and Europe have led to anti-dumping duties and punitive tariffs on Chinese solar products.

At the end of March 2012, Suntech’s net debt stood at $1.6 billion. The company has not published more recent financial information since then. Since the second half of 2012, rumors have been circulating that the company has been trying to find a white knight to take over and inject fresh capital into the company.

On top of the business failures, the company has been embroiled in a power struggle. Earlier this month, Shi said in a statement that he was improperly removed as chairman and that he was committed to staying. In a statement on March 4, Suntech named Susan Wang as chairperson to replace Shi but said he would remain chief strategy officer. In August, Shi was replaced by David King as CEO of the company.

On Friday, Suntech Power defaulted on a $541 million bond payment, which triggered cross-defaults under Suntech’s other outstanding debt, including loans from International Finance Corp and Chinese lenders, according to a statement from Suntech earlier this week.

The company also said in the press release that the court had appointed a committee of local government representatives and accounting professionals, who would administer the restructuring of subsidiary Wuxi Suntech’s debt obligations.

Other major Chinese solar producers, including Yingli Green Energy, LDK Solar and Trina Solar, have also reported heavy losses. Analysts said the collapse of Suntech’s largest subsidiary suggests the industry may be entering a period of consolidation and adjustment as the market sorts through excess supply. They added that panel prices will stabilize, offering the remaining solar companies a chance to compete with fewer cheap products.

China has been trying to boost its solar panel market by installing more solar panels at home, and the country is expected to be the world’s biggest installer of panels in this year.

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